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Camping World Story Weaves Tale Of Store Growth And Strong Management

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Camping World Story Weaves Tale Of Store Growth And Strong Management

Initiating coverage of Camping World Holdings Inc (NYSE: CWH), Credit Suisse said it sees it as a story with above-average store growth that offers a high service recurring revenue model, strong management and low valuation, making it one of the most attractive stories in the consumer space.

Meaningful Upside Likely

Analyst Seth Sigman's base-case scenario projects high-single-digit EBITDA/low-double-digit EPS growth. Nevertheless, the analyst believes Camping World has the potential to deliver meaningful upside based on its historical track record and a number of upside drivers. The analyst also sees acquisitions, further decoupling from the industry, growth of its service business and steady margin gains.

Growth Opportunity

While noting that macro and demographic drivers suggest a strong industry outlook, the firm said it sees growth opportunity for Camping World, given its unique offering, stronger financial model, growth opportunities relative to auto dealers and its ability to navigate industry cyclicality.

Gross Profit Opportunity Galore

Analyzing the company's gross profit opportunity, Credit Suisse commended it for its unique recurring model:

  • 40 percent of it recurring, suggesting steady cash flow potential.
  • 20 percent is from high margin finance and insurance.
  • Remaining 40 percent from new and used vehicles sales, where it has significant market opportunity.

Rating, Price Target

Credit Suisse initiated coverage of the company at Outperform. It has a $28 price target for the shares of the company.

At last check, Camping World was down 0.89 percent at $22.16.

Posted-In: Seth SigmanAnalyst Color Long Ideas Initiation Travel Analyst Ratings Trading Ideas General Best of Benzinga

 

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